Global Economics

Top Nano Vendors May Follow Tata out of Singur


Auto-part suppliers for India's iconic Nano may leave Bengal also if Tata suspends or scales down its Singur operation

The ongoing impasse at Singur is making Tata Motors' top vendors extremely antsy, prompting plans of either a pullout or a significant scaling down of operations in West Bengal.

Even before the company officially announced suspension of construction and commissioning work at Singur on Tuesday evening (ET had reported that Tatas would take a decision on the pullout within a fortnight in the issue dated August 26), a section of Nano vendors had indicated that they were planning to either shift to another Tata Motors' plant location or substantially scale down their presence at Singur.

Bengal stands to lose not just the mother plant but 56 ancillary units and the jobs they would create as well. The agitation has also resulted in the scaling down of Nano targets for this calendar year.

Sources say that the earlier target was to hit around 50,000 units between October and December but now that has been scaled down to a mere 5000-6000 units for the same period. Tata Motors has never officially announced its production or sales targets though the Singur plant was to have started with 250,000 units, to be scaled up to 350,000 units.

According to sources in the auto industry, the fiveday standoff at Singur has made vendors extremely apprehensive. Tata Motors has reportedly asked its vendors to keep a back-up plan ready when the stalemate seemed set for a long haul. Many of the vendors for Tata Motors' Nano car have manufacturing facilities at Pantnagar and are suppliers for Tata Motors' small truck ACE, which is manufactured there.

As a result Pantnagar is emerging as the favourite Plan B option for most big vendors. Says a top Nano supplier which is putting up a significant facility at the supplier park in Singur, "We are looking at phasing our investments there. As of now, if we have to, we will put in only investments required for the trim that will debut first. Later trims and their investments could well go to alternative sites like Pantnagar."

What helps is that most of them already have land in Pantnagar. "We will move with the Tatas. We will go wherever they go. We are supplying them critical engine parts for Nano. It is a very sensitive component and we had planned to supply it from our Gurgaon plant for the first year till our plant came on stream at Singur. We also have taken land at Pantnagar, which is independent of Tata Motors' facilities and in an eventuality, we could commence production from Pantnagar if required," said a Delhibased Nano supplier.

Another supplier, which is supplying electric components and switches, is heading for Pantnagar too. "We have not been officially asked yet, but there are feelers to look at alternate production sites. We have a small manufacturing facility at Pantnagar and another one in Pune. We would supply Tata Motors from both of these facilities for Nano and its other product in future," said the supplier.

The vendor park at Singur was supposed to house 56 Nano suppliers. Some of them had started construction work and others were just about starting, depending of the nature of the components they supply. Tata Motors has consistently maintained that the Nano production model is such that the vendors and the company have to be contiguous.

Governor agrees to play mediator

IT might prove all in vain. But even as Tata Motors announced late on Tuesday evening its decision to suspend work at Singur coupled with plans to relocate the Nano factory, West Bengal governor Gopal Krishna Gandhi agreed to don the mediator's hat between the state government and opposition Trinamool Congress to save Singur.

It might just prove a trifle late in the end. Be that as it may, Raj Bhavan circles confirmed, "The governor has made the decision known to chief minister Buddhadeb Bhattacharjee during his talks with the latter on Tuesday evening. The request had come from the Trinamool Congress leadership earlier in the day.

A senior bureaucrat of the state government said, "The decision has come at a time when the governor himself had started taking the initiative to resolve the impasse. He had held several rounds of talks with both the chief minister and the leader of the Opposition for the past few days."


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